WILLCOCKS v NEW BROKEN HILL CONSOLIDATED LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and MEAGHER JJA 17 November 1989, 21 December 1989 [1989] NSWCA 233 Workers' Compensation — assessment and amount of compensation — partial incapacity — calculation of sum payable — miner — miner enters voluntary retirement — continuing physical incapacity and economic loss — claims compensation under s11(1)(a) of the Workers' Compensation Act 1926 — trial judge (McGrath J) awards $90 per week — appeal — held: (per Kirby P) The calculation and exercise of discretion provided by s11(1)(a) miscarried in that no reference was made to the hypothetical continued earnings as a miner and, on the contrary, the trial judge had wrongly assumed that the worker was, by agreeing to the retirement redundancy, placed outside the mining industry. At most, his retirement from one mining employer was a consideration to be taken into account in the exercise of the discretion in the "third stage" required by s11(1)(a). Accordingly, the award must be set aside and the matter sent back to the Compensation Court for redetermination. Kirby P This appeal was heard concurrently with the appeal in O' Loughlin v TheZinc Corporation Limited, judgment in which is delivered at the same time as this. The facts of this case were substantially similar to those of Mr O'Loughlin's case. In my respectful opinion, the error of law which occurred at first instance was, relevantly, the same. McGrath J, before whom the proceedings came in the Compensation Court, referred in giving his short reasons for the award which he entered in this case, to the facts of Mr O'Loughlin's case. He acknowledged one or two distinguishing features which do not concern this appeal but are related strictly to medical and factual questions. He then went on to express a general view about the effects of the voluntary retirement agreement which Mr Willcocks, as Mr O'Loughlin, had entered with the respondent: "T do not need to repeat what I have said about my view about the effect of the voluntary retirement agreement. It does not attempt to contract out of the benefits of the Act, but in my view it does have the effect of putting the applicant in a position where he has placed out of consideration his mining earnings, as being the appropriate comparable consideration. In my view this is a case which falls squarely within the area delineated by Elliott's case and I apply the same principles. If I am wrong in that, well, greater minds than me can bring to bear their brilliance upon the subject matter." Brilliance is not what is required. The Compensation Act must be applied by a whole range of persons who do not even pretend to the "brilliance" of judges. What is required is a careful adherence to the three stage approach required by s11(1)(a). Unfortunately, I am of the view that McGrath J did not here take the three steps mandated by the section. If anything, his failure to do so is even more plain in this case than in O'Loughlin. Indeed, the way in which his Honour approached the matter in this case reinforces and strengthens my opinion that his Honour also erred in O'Loughlin, decided at the same time. After the passage just cited his Honour said: 2 UNREPORTED JUDGMENTS "T find the applicant suffered employment injury to the left knee, neck and back; that he is partially incapacitated since 1 August 1986; probable earnings if uninjured outside the mining industry, approximately $450 a week; able to earn about $300 to $350 a week. I find in the exercise of the discretion under the conditions set out in s11(1), the amount payable as reasonable, having regard to those matters to be the sum of $90 a week." The following observations must be made upon the above passages which, although expressed shortly in his Honour's reasons, are the sole indication to the appellant and to this Court of the process which his reasoning took: 1. There is absolutely no reference in his Honour's reasons in this case to the preinjury earnings as a miner of Mr Willcocks. Yet that is the first and starting point of the calculation obliged by s11(1)(a); 2. Nor is there any finding reflected in the award of the pre-injury mining earnings of Mr Willcocks, despite the fact that it is essential to have that figure in mind for it sets what I have in O'Loughlin called the first of the "parameters" upon which later the discretion provided in the third stage in s11(1)(a) is to be exercised; 3. On the contrary, far from keeping that figure (necessarily high in the mining industry) in mind, McGrath J has expressed the view that by reason of the voluntary retirement agreement the appellant was in a position "where he has placed out of consideration his mining earnings". With every respect, this statement is incorrect. Those "mining earnings" must be taken into account in the first of the three steps which s11(1)(a) dictates; 4. As to the statement that the case falls "squarely within the area delineated by Elliott's case" and that he would "apply the same principles", I repeat that there are important differences between this and Elliott's case. It is important not to confuse the similarities just because the workers in each case were miners who had retired. Elliott was a case of compulsory retirement. This was not. Elliott required retirement from the coal mining industry. This was simply retirement from the respondent. Elliott was working in a coal mine governed by legislation as to retirement. Mr Willcocks was not; 5. When his Honour came to determine the amount under s11(1)(a) he did so by reference not to the parameters fixed by the Act but only those fixed by "probable earnings if uninjured outside the mining industry... and (the amount he is) able to earn'. The reference to "outside the mining industry", if it were intended to fix the first sum in the s11(1)(a) equation, was incorrect. For it is precisely the earnings inside the mining industry which the section requires the court to take into account. Those earnings must be taken into account despite compulsory statutory requirement from the industry, let alone voluntary retirement from one employer only under a redundancy scheme. There is no evidence that they were taken into account. On the contrary, the statements in his Honour's reasons suggest that they were not; and 6. In so far as there is therefore a reduction to about a fifth of the difference between the two sums fixed by the "parameters", McGrath J gives no reason at all for the award which he entered. Such a substantial reduction would attract an obligation to state, at least in broad terms, the reasons that had led to such a significant deduction from the figure produced, as the maximum, by the first and second stages of the application of the section. The fact of retirement from one employer (or retirement generally) would be a consideration to be taken into account in the examination of all the facts in order to determine the "third step" where a judicial discretion must be exercised. See McHugh JA in Australian Wire Industries Pty URJ —WILLCOCKS v NEW BROKEN HILL CONSOLIDATED LTD (Meagher JA) 3 Ltd v Nicholson, Court of Appeal, unreported, 4 February 1986. But the fact that his Honour appears to have enlarged retirement from the respondent to retirement from the mining industry and to have assumed that the appellant put himself "outside the mining industry" forever, mis-states the effect of his agreement with the respondent. It therefore caused the exercise of the discretion worded by s11(1)(a) of the Act to miscarry. Mahoney JA This appeal was argued with the appeal in O'Loughlin v The Zinc Corporation Limited. It is agreed that it raises the same issues and must suffer the same fate. Upon the basis of the reasoning which I have adopted in the O'Loughlin case, I agree with the orders proposed by Kirby P. Meagher JA This appeal, which was heard concurrently with the appeal in O'Loughlin v The Zinc Corporation Limited, raises the same issues and must suffer the same fate. It should be dismissed with costs. I would only add that it was urged on us that the principles of Elliott's Case (1967 Sr 87) could not be extended from statutory illegality to voluntary redundancy. This submission must be firmly rejected. The principles of that case apply whenever, for any reason, the resumption of a prior employment becomes impossible. Conclusions and orders The result is that in my opinion a mistake has occurred. The orders which should be made are therefore: 1. Appeal allowed; 2. Set aside the award of McGrath J dated 23 June 1988; 3. In lieu thereof, order that the proceedings be returned to the Compensation Court of New South Wales to be determined in the light of the judgment of this Court; 4. The respondent to pay the appellant's costs of the appeal. Counsel for the Appellant: BJ Cross QC/HN Kelly Solicitors for the Appellant: Buckworth and Buckworth Counsel for the Respondent: L King Solicitors for the Respondent: Austen Brown Thompson